Developers now eye affordable housing projects

Published: Sunday, September 7, 2008, 12:31 [IST]

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New Delhi, Sep 7 (UNI) A FICCI-Ernst and Young Real Estate Study shows that there is growing interest among developers and private equity players to undertake 'affordable housing' projects, which bypassed the earlier real estate booms.

The reason for this new found interest among developers is driven by the volume-based profitabiliy and subsidised land costs.

Moreover, the government has accorded a priority status to the affordable housing sector, which developers want to capitalise by early entrance in the sector.

Although, there is no clear definition of what constitutes affordable housing, the study says that 35 per cent of the developers categorise this in the range of Rs 10-15 lakhs, and an equal number in the range of Rs 15-25 lakhs.

The report lists the various government incentives and conducive policies to attract the private participation in this unexplored sector.

''The key success factors for affordable housing include the use of alternate materials and low-cost technique and mechanisms, apart from faster approvals from the government,'' the Report said.

The Report, to be released at FICCI's International Real Estate Summit in Mumbai on September 10 this year,'' says the respondents' believe that genuine end-users have ''taken over'' from the investors and account for 80-90 per cent of sales in their current projects.

Most of the respondents seem to be reaching a consensus that land values are likely to see stability over the short to mid-term and may not witness any appreciation over next 12 months.

The present asset focus for developers continues to be residential as stated by 70-80 per cent respondent, followed by commercial and retail.

However, the report said several 'neo-assets' like ware-housing, healthcare infrastructure, logistics will emerge as integral part of developer's futute portfolio.

About 62 per cent of respondents foresee the Indian real estate sector embarking upon high growth trajectory in the longterm, despite the ''momentary slowdown'' witnessed over last 12 months.